Malloy: Christie no hero on pensions

The popularity of New Jersey Gov. Chris Christie grates on Connecticut Gov. Dannel P. Malloy. That seemed apparent when, without any prompting, the Connecticut governor brought up the rising Republican star during his meeting with our editorial board March 11.

The subject was the challenge Connecticut and many states face in addressing grossly underfunded pension plans for state employees. Gov. Malloy referenced some of the tough political choices he has made to improve the pension outlook in Connecticut. Then, without using the name, he referenced Christie. He proceeded to tie him to a former Connecticut governor, Republican John G. Rowland, who coincidentally was driven from office in scandal and spent a year in the federal pen, before landing a radio show.

"My good friend, the governor of New Jersey, who went to the legislature, got changes enacted by legislation, but under that legislation did what John Rowland did in our state by agreement with the unions. (Christie) got an agreement to not fully fund the pension obligation for eight years (actually seven)," said Malloy, who appears to have been paying attention to New Jersey's pension policies. "When they start to fully fund their pension obligation the unfunded portion … will be larger than on the day he signed the legislation."

There are many other states and governors doing a lousy job funding state pensions, so why point to Christie? I suspect Malloy considers Christie to be overrated, his much heralded ability to hold the line on taxes a bit of a flimflam, built on cutting municipal aid and kicking pension obligations down the road.

It has to annoy Malloy, a Democrat, that it is working very well for Christie, his latest Quinnipiac University poll number an unheard of sky-high 74 percent in New Jersey, a traditionally Democratic state. This month Malloy achieved his highest approval rating since taking office in January 2011, a modest 48 percent.

But on the pension matter, Malloy has a point.

When Christie pushed through pension changes that required public workers for the first time to contribute toward their retirement, and raised the retirement age from 62 to 65, the national media saluted the ability of a tough Republican governor to rein in out-of-control government unions.

Left out of that narrative was Christie's decision not to put any state money towards pensions in his first year in office, which makes it much easier to balance the budget, but causes long-term fiscal problems. And the 2011 law that required workers to kick in, and retire later, also allowed the state to wait another seven years to contribute the amount necessary to properly fund the pension plan, building to that total in increments.

For example, this fiscal year New Jersey will contribute about $1 billion to its pensions, when the actuaries call for $3.74 billion. Christie concedes that approach moves finances in the wrong direction. "The unfunded liabilities will continue to increase somewhat," Christie told the New Jersey press. But, he noted, his state is at least going in the wrong direction slower. "We're falling behind by a heck of a lot less than we were in the years before I got here," he said. A self-administered slap on the back for that achievement seems hardly Christie like.

Under the deal Malloy's administration reached with Connecticut labor unions, his state employees will also begin contributing to their retirements starting July 1. And penalties for early retirement will encourage state employees, many who in the past have left in their late 50s, to work longer. By 2022 the mandatory retirement age will be 63 or 65, depending on date of hire. The Malloy administration estimates savings from the concessions at $21 billion over 20 years.

But unlike New Jersey, Connecticut's governor, in order to start catching up, is pursuing a policy to contribute amounts larger than the spending necessary to tread water - $468 million extra next fiscal year, $180 million the following year, according to the governor's budget proposal. The administration estimates saving another $5.8 billion in financing by paying more up front. The plan also addresses perhaps the most serious threat to adequately funding the pension plan. In 2029 and 2030 the state faced balloon payments totalling $7.8 billion. Given the state spends $20 billion on the entire budget, making those payments would have been impossible. How did that happen? To save money short term, Rowland inflated those balloons in a deal he made with the labor unions, thus Malloy's comparison with Christie's approach.

Unfortunately for Malloy he inheritid a pension plan in far worse shape than did his New Jersey counterpart. Connecticut's pension plan has a funded ratio of 42.3 percent, when 80 percent is recommended, a goal Malloy wants to reach in 2025. New Jersey, with $77 billion in assets, has a funded ratio of 64.6 percent.

I emailed Christie's press office for comment on Malloy's criticisms. I received no response. I suspect Christie is not terribly preoccupied with how Malloy is doing or what he is saying.